What is in this article?:
While many U.S. manufacturers have gone on record as opening new U.S.-based plants or bringing work back from foreign shores, it's difficult to measure whether these moves are symbolic or substantive. In this Big Data-obsessed world, the reason why the economic effects of both offshoring and nearshoring tend to be anecdotal rather than substantive can be easily explained in two words: no data.
Production of the new frontload washer and dryer at GE Appliance Park in Louisville, Ky., part of GE's commitment to create new jobs in the U.S. Photo:General Electric CO.
Reshoring, like politics, makes strange bedfellows. Consider, for instance, the recent spectacle of retail giant Walmart gathering 500 of its biggest suppliers into one room and urging them to manufacture their products right here, in the United States. There is a delicious irony in the fact that Walmart, of all companies, is now spearheading a "Made in the USA" effort since it was largely the retailer's insistence on rock-bottom low prices that led many of its U.S. suppliers to ship their work overseas to China in the first place. Probably no other company has done more to promote Chinese-made goods to the American public than Walmart, and yet as the political winds shift, so too do the sourcing strategies of U.S. companies.
Just ask Jeff Immelt, chairman and CEO of industrial conglomerate General Electric Co. (IW 500/6). Since 2002, on Immelt's watch, GE has reduced its U.S. workforce by one-fifth (according to The New York Times), while adding tens of thousands of jobs overseas. Immelt's appointment a couple years ago to head up the Obama Administration's Jobs Council raised eyebrows not solely because of GE's proficiency at offshoring jobs, but also because the company's core competency is actually finance, not manufacturing. (GE has more than $100 billion in untaxed profits parked overseas, according to Bloomberg data.)
Nevertheless, GE has pulled off a 180-degree shift, from being the poster child for offshoring to becoming a champion of reshoring, thanks to its decision to invest close to $1 billion in its GE Appliances business. Using lean manufacturing principles, GE will, among other things, build high-end frontload washers and dryers at its Appliance Park facility in Louisville, Ky. -- the first time these types of products have been built in the U.S. But the real attention-getter is the creation of 3,000 new GE jobs in Louisville.
Not surprisingly, those new jobs have Kentucky politicians beaming with pride. "GE is a prime example of the growth that can come when we combine federal and private investments to develop new technologies, attract new product lines and create more jobs here at home," says Rep. John Yarmuth, making it clear if not necessarily obvious that government incentives (funded, of course, by taxpayer dollars) had a lot to do with convincing GE to invest in U.S. jobs rather than Asian jobs.
A Dearth of Data
What's unclear, though, is how significant an event this is beyond the borders of Kentucky. While many U.S. manufacturers have gone on record as opening new U.S.-based plants or bringing work back from foreign shores, it's difficult to measure whether these moves are symbolic or substantive. In this Big Data-obsessed world, the reason why the economic effects of both offshoring and nearshoring tend to be anecdotal rather than substantive can be easily explained in two words: no data.
For instance, Chad Moutray, chief economist of the National Association of Manufacturers (NAM), says there is no data available on how many U.S. companies are manufacturing product overseas. Similarly, there are no hard numbers to indicate whether offshoring is continuing at the same pace it has been for the past 20 years, whether it's decreasing or even whether it's increasing.
"There is absolutely no government data," adds Harry Moser, founder of the Reshoring Initiative, an industry-led effort to bring manufacturing jobs back to the U.S. (as well as a member of IndustryWeek's Manufacturing Hall of Fame). To compensate for that dearth of data, Moser has tracked all of the published articles and news reports of reshoring efforts, and produced a best-guess scenario of the current state of offshoring vs. reshoring.
In the years 2000 to 2008, Moser projects that U.S. manufacturers were offshoring jobs at the rate of 100,000 to 150,000 per year. Over the same time span, reshoring efforts accounted for roughly 2,000 jobs per year, he believes. Today, however, the situation has markedly changed, as the reshoring of jobs to the U.S. has risen to about 30,000 jobs per year, while offshoring has slowed to between 30,000 and 50,000 jobs per year. So we've almost reached a plateau where reshoring has caught up to offshoring, Moser believes.
"It took us 60 years of offshoring to get us where we are today," Moser points out, "and it could take 20 to 30 years to reverse the trend."